Whether you’re in a stable financial position or not is decided by a bank before they lend you a mortgage. You are probably familiar with the words “credit score.” It’s the number on your credit report, which gives lenders peace of mind that you will be able to pay back the loan. This number is directly tied to your financial stability and helps you determine whether you will qualify for the loan or not.
With a higher score, you will get a better loan amount and favorable interest rates. A lower credit score will subject you to a higher interest rate. Here’s a breakdown of how credit scores work by the world’s leading credit reporting company ― Experian:
- Excellent (961 to 999)
You will have access to the best deals with low interest rates.
- Good (881 to 960)
You will have access to some of the best deals with low interest rates.
- Fair (721 to 880)
You will have access to good deals with reasonable interest rates.
- Poor (561 to 720)
You will have access to good deals but the interest rates will be quite high.
- Very Poor (0 to 560)
No bank will agree to give you a loan, and if you do, find a private lender ready to accommodate you. They will put an extremely high interest rate on the monthly payments.
Credit Score Calculation
Several factors affect your credit score. These include:
- How many times have you applied for a loan or credit card
- Your payment history
- The size and type of loan you applied for
- How many times you failed to make a payment of your debt
- Any default judgments and court writs
Can I Get a Loan If I Have a Low Credit Score?
Yes, you can get a loan even with a low credit score. However, there’s a catch.
Look at the credit score list above, and you will know what. You will find plenty of specialist lenders ready to grant you a mortgage but with a few strings attached. First, you will be subjected to a high interest rate and second, you will pay private mortgage insurance. In some cases, the loan options are limited too because the lenders are trying to protect their investment.
How to Improve Your Score
Below are a couple of ways to improve your credit score:
- Pay your utility bills on time
- Pay down your debt
- Monitor your daily expenses
- Do not apply for multiple credit cards
- Check your credit report to make sure that there are no discrepancies
- Limit discretionary spending
- Create a budget and start saving
Now you know why a credit score is so important for buying Orlando real estate. Stick to the tips mentioned above, and you will improve your credit score in no time.
With a Dr. Phillips relator by your side, you can speed up your mortgage application process and find reasonable rates even on a low credit score. Visit the website Megan Dowdy Realty now to consult with a professional Orlando realtor. For further information, call on 407-509-9279.
